Earlier this week, Jim Cramer pondered whether the U.S. economy had reached bottom, given such recent signs as stronger-than-expected retail sales and investor interest in homebuilders. In particular, he said he's looking at next week's quarterly results from Lowe's (NYSE: LOW) and Home Depot (NYSE: HD) as a sign for the housing sector and for the potential market rally.
Lowe's is expected by analysts surveyed by Thomson Financial to report second-quarter earnings of 39 cents per share, down 18.8% from 48 cents per share in the same period in 2007, but up 28.2% from 28 cents per share in the previous quarter. The company has provided positive surprises in four of the past five quarters.
North Carolina-based Lowe's is the second-largest U.S. home improvement chain, behind rival Home Depot, and the second-largest appliance retailer after Sears (NYSE: SHLD). In the past year, the company's revenues were $48.2 billion and its net income totaled $2.8 billion. Its long-term EPS growth forecast is 12.7%, which is better than its industry average. The consensus recommendation of analysts remains to buy Lowe's.
The stock is up 9.9% since the beginning of the year, but has fallen 20.5% from a year ago. It trades at a P/E ratio of 13.38. Shares closed Friday at $24.89.
Home Depot is expected to report second-quarter earnings of 37 cents per share, down 22.9% from 48 cents per share in the year-ago period, as well as down 8.1% from 40 cents per share in the previous quarter. The company has tended to fall short of estimates recently, by nearly 7% in the first quarter.
Atlanta-based Home Depot is the largest U.S. home improvement chain, and the second-largest retailer in the U.S. after Wal-Mart (NYSE: WMT). In the past year, Home Depot's revenues were $77.3 billion and its net income totaled $4.5 billion. The company's long-range EPS growth forecast is 11.09%, better than the industry average but a little less than Lowe's. The consensus recommendation of analysts is still to buy Home Depot, but has been inching toward hold.
The share price is up 8.4% since the beginning of the year, but has fallen 24.2% from a year ago. It trades at a P/E ratio of 12.82. Shares closed Friday at $29.10.
Lowe's is scheduled to report earnings Monday morning, Home Depot on Tuesday morning.
For more news that could influence the results, see BloggingStocks' Lowe's coverage and Home Depot coverage.
Before the bell: Futures lower as oil rises, despite Alcoa earnings
Alcoa's Q2 2008 earnings transcript
Sir John Templeton, best contrarian investor of the 20th Century, dies at 95
Reader Comments (Page 1 of 1)
5-18-2008 @ 10:26PM
Richard said...
It is very likely that Lowe's and Home Depot will report a drop in sales. Anyone shopping in the stores recently will quickly realize the lack of customer service as these companies try to cut costs by trimming the payroll. It has a negative effect upon the customers, no service equals less sales. Robert Niblock has proven that he cannot effectively manage Lowe's by the results since he took over from Robert Tillman. The executives inside Lowe's are less capable and fewer of them are long term Lowe's veterans that built the company to such high standards.
6-15-2008 @ 1:19AM
jsteven said...
Its a nice thing Richard said that lacking of customer services lead to drop in sales.I also agreed to Robert Niblock that even Lowe's manage effectively.
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